"When People Jump In Even Though It's Overpriced, That's A Bubble" Shiller Warns
Bob Shiller moves beyond his normal fence-sitting perspective and goes full Marc Faber in this brief clip. Noting that his CAPE indicator of equity market valuation is flashing red (highest since 1929, 2000, and 2007), Shiller warns it is "when people jump into stocks even though they know valuations are high... that's a bubble," slamming CNBC's rosy perspective reflecting that this is the same as the dotcom rise. Notably he warns specifically "The US equity market is one of the highest in the world," and now is a good time to diversify away from it. Additionally Shiller warns of the slowing momentum in the housing market... warning that mean-reversion is likely with risk for further decline.
Shiller also slams the bull$hit addage that "booms don't die of old age..." warning that inventories across goods-producing industries are building worryingly...
As Shiller explains...
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he still owns stocks so how worried is he? he did say the housing market is weakening..he is right on that score..home prices mean reverting for the past 100 years! construction low right now. inventory is low in housing, autos, etc, Moderate increases in home prices better than a drop. Slow and steady. i think and he didn't cover this, as rents continue to rise demand for housing will increase.
Schiiler I guess he wants to sell more of his book ergo his bubble talk. His Cape analysis has come under fire for its over-reliance on metrics like PE..as far as the US market being overheated- I don't see it.